New Financial Services Authority Rules

FSA revealed plans to stop financial companies offering benefits to employees for risky behaviour

The new proposals go much further than the original draft ‘remuneration code’ revealed by the Financial Services Authority on 26 February, which only applied to wages and bonuses paid by banks participating in the government’s Asset Protection Scheme (APS).

The FSA proposed that the new code be included into its guide, which would then give it the power to heavily punish those who transgress the rules. The regulator will extend the rules to include salaries, bonuses, severance packages and pension schemes.

The ex-chief executive of RBS, Sir Fred Goodwin, was one of the catalysts for this move. Along with other key players.

The FSA said the new code would initially apply to the leading UK financial companies, including 34 banks and three building societies.

However, the scheme may be extended at a later date to cover all financial firms. The proposals, if accepted, will be part of the FSA rules within 12 months